BENETTON ’96 NET UP 11.5%; CITES LIRA FOR 2.3% SALES DROP
MILAN — Net profit at Benetton rose 11.5 percent in 1996 to $148.2 million (246 billion lire), as sales declined 2.3 percent to $1.75 billion (2.9 trillion lire).
The sales decline was attributed chiefly to the strengthened lira, according to Carlo Gilardi, Benetton’s managing director. This also hit operating profit, which fell 9.5 percent to $242.2 million (402 billion lire).
Despite the drop in sales and operating profit, “Benetton was able to achieve a rise in net profit because of a successful foreign exchange hedging program,” said Paul Gordon, an analyst for IMI Sigeco.
Also, for the first time Benetton’s net debt dropped to zero last year; at the same time, cash on hand hit $80.1 million (133 billion lire).
Commenting on the results, Gilardi said, “We’re very happy that net profit rose despite last year’s strong lira. We’re also excited about the cash reserves, which we are considering using to acquire a new company.”
Gilardi said Benetton was looking at a number of possible acquisitions; one of them is Benetton Sportsystem, which is wholly controlled by Edizione Holding SpA, the Benetton family’s holding company.
Benetton Sportsystem controls or holds majority stakes in sports equipment companies including Nordica, Prince and Rollerblade. Its sales in 1995 came to approximately $843 million (1.4 trillion lire).
Gordon observed that Benetton’s results in general, and especially the cash on hand, showed the company was “supremely efficient.”